[Federal Register Volume 72, Number 246 (Wednesday, December 26, 2007)]
[Notices]
[Pages 73053-73055]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-24897]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56905; File No. SR-NASDAQ-2007-087]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to 
Modify Fees for Members Using the Nasdaq Market Center

December 5, 2007.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on October 31, 2007, The NASDAQ Stock Market LLC (``Nasdaq'') filed 
with the Securities and Exchange Commission (``Commission'') the 
proposed rule change as described in Items I, II , and III below, which 
Items have been substantially prepared by the Exchange. The Exchange 
filed the proposed rule change pursuant to section 19(b)(3)(A) of the 
Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ which renders it effective 
upon filing with the Commission. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes to modify pricing for Nasdaq members using the 
Nasdaq Market Center. Nasdaq will implement this proposed rule change 
on November 1, 2007. The text of the proposed rule change is available 
at the Exchange's Web site, the Exchange and the Commission's Public 
Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, Nasdaq included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed

[[Page 73054]]

rule change. The text of these statements may be examined at the places 
specified in Item IV below. Nasdaq has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Effective November 1, 2007, Nasdaq is implementing a set of pricing 
changes relating to securities listed on exchanges other than Nasdaq 
and the New York Stock Exchange (``NYSE'').\5\ Specifically, for 
certain ``Low-Volume Securities,'' Nasdaq is adopting an enhanced 
liquidity provider rebate of $0.004 per share executed.\6\ A Low-Volume 
Security is defined as a security listed on an exchange other than 
Nasdaq or the NYSE with an average daily volume on all venues during 
the preceding month of less than 200,000 shares. For each calendar 
month, the determination of Low-Volume Securities will be made on the 
25th day of the preceding month, based on trading volumes since the 
25th day of the month before. For example, the determination of Low-
Volume Securities for trading during the calendar month of November 
would be made on October 25, based on trading volumes from September 25 
until October 24. The list of Low-Volume Securities will be posted on 
the NasdaqTrader.com Web site. By announcing the list prior to the 
first of the month, Nasdaq believes that it will enable market 
participants to reflect on the list when making trading decisions at 
the beginning of the month. A security with seven or fewer trading days 
during an assessment period, such as a new listing, will not be 
considered a Low-Volume Security, regardless of its volume, since the 
lack of trading data does not provide a meaningful basis for 
determining the security's potential volume during the following month.
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    \5\ Transaction reports for these securities are disseminated by 
the Consolidated Tape Association (``CTA'') on ``Tape B.''
    \6\ There is, however, no liquidity provider rebate if the 
execution price is less than $1 per share.
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    As a corollary to the enhanced liquidity provider rebate for Low-
Volume Securities, Nasdaq will be eliminating market data revenue 
sharing for these same securities. Nasdaq's existing program for 
sharing 50% of market data revenue with liquidity providers in Tape B 
securities will remain in effect for Tape B securities that are not 
Low-Volume Securities.
    Nasdaq believes that because the amount of a liquidity provider 
rebate is known by market participants prior to order execution, it 
provides a more direct incentive for liquidity provision than market 
data revenue sharing, the exact amount of which is estimated monthly 
but confirmed on a quarterly basis and depends upon a range of factors 
beyond the control of a particular market participant. Accordingly, 
Nasdaq believes that substituting an enhanced rebate for market data 
revenue sharing may encourage market participants to make greater use 
of Nasdaq for trading the securities covered by the program.
    At present, Nasdaq's only active program for market data revenue 
sharing is for liquidity providers in Tape B securities.\7\ 
Accordingly, the proposed enhanced rebate applies only to these 
securities. Moreover, Nasdaq's initial focus is on Low-Volume 
Securities (as defined above and in the rule) because Nasdaq believes 
that an enhanced credit may encourage tighter spreads and more overall 
activity in these stocks. Moreover, the focus on these securities will 
allow Nasdaq to evaluate the financial and market behavior impact of 
the change without materially increasing the overall amount of 
liquidity provider credits that it pays.
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    \7\ The Financial Industry Regulatory Authority (``FINRA'')/
NASDAQ Trade Reporting Facility also maintains a revenue sharing 
program, but Nasdaq's program under Rule 7024, which allows for 
discretionary sharing of an unspecified percentage of certain 
operating revenues, is not currently in use.
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2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of section 6 of the Act,\8\ in general, and with section 
6(b)(4) of the Act,\9\ in particular, in that it provides for the 
equitable allocation of reasonable dues, fees and other charges among 
members and issuers and other persons using any facility or system 
which Nasdaq operates or controls. The change responds to fee changes 
by NYSE to ensure that Nasdaq's fees for routing to NYSE are generally 
consistent with charges that NYSE imposes on Nasdaq when it routes 
orders to it.
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    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(4).
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B. Self Regulatory Organization's Statement on Burden on Competition

    Nasdaq does not believe that the proposed rule change will result 
in any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, as amended.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments on the proposed rule change were neither solicited 
nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing proposed rule change is filed pursuant to section 
19(b)(3)(A)(ii) of the Act \10\ and subparagraph (f)(2) of Rule 19b-4 
thereunder \11\ because it establishes or changes a due, fee, or other 
charge applicable only to a member imposed by a self-regulatory 
organization. Accordingly, the proposal is effective upon Commission 
receipt of the filing. At any time within 60 days of the filing of the 
proposed rule change, the Commission may summarily abrogate such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-NASDAQ-2007-087 on the subject line.

Paper comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASDAQ-2007-087. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements

[[Page 73055]]

with respect to the proposed rule change that are filed with the 
Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for inspection and copying in the 
Commission's Public Reference Room, 100 F Street, NE., Washington, DC 
20549, on official business days between the hours of 10 a.m. and 3 
p.m. Copies of such filing also will be available for inspection and 
copying at the principal office of Nasdaq. All comments received will 
be posted without change; the Commission does not edit personal 
identifying information from submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NASDAQ-2007-087 and should be submitted 
on or before January 16, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-24897 Filed 12-21-07; 8:45 am]
BILLING CODE 8011-01-P